Professionals run an extremely high risk not just on their reputation but also their personal finances while offering advice or services to their clients, as there is always a chance of negligence or oversight while carrying out their professional duties.
Professional Indemnity policy covers claims brought against the company or employees for giving negligent advice, design or specification to third parties.
The policy covers legal costs and expenses incurred in defence of the insured, as well as any damages or costs that may be awarded, if the insured is alleged to have been negligent in providing professional services that cause the client to lose money.
WHO SHOULD BUY
Any professional who possesses knowledge and skill which is valued by the society, one who is tertiary qualified, usually a member of a professional association, may have a licence to provide specialist service or advice, one who holds oneself out as having specialist training and expertise and where the advice is usually given in exchange for a fee.
Examples – Doctors, engineers, architects, software firms, Hospitals, Sports trainers or instructors, teachers and educational institutions, Digital marketing firms, Financial institutions, Financial advisors, Stockbrokers, Insurance brokers, Chartered Accountants, Management consultants, lawyers etc.
The cost of insurance is quite low vis-à-vis the risks that it offers protection against.
The Sum Insured can start from INR 2,500,000 with premiums as low as INR 20,000 for small and medium sized firms. Higher Sums can be opted depending on the size and operations of the firm.
WHO CAN BRING CLAIMS?
A third party most often clients of the insured who have suffered monetary loss because of insured’s negligent advice or service.
PROFESSIONALS CAN BE HELD LIABLE FOR
• Failure to perform to specifications
• Errors and omission in the delivery of a solution
• Project Mismanagement – cost overruns and delays
• Breach of Confidentiality – client information
• Breach of Intellectual Property
• Loss of Data because of wrongful act
• Failure to maintain adequate security – network/internet
• Computer viruses – transmission or failure to protect
• Internet Liability
• Privacy breach
POLICY FEATURES/ EXTENSIONS
• Medical Practitioners Endorsement – Only for doctors
• Loss of documents – including computer records
• Breach of Confidentiality
• Dishonesty of employees
• Libel, Slander and defamation -written or verbal defamation
• Specialist consultants
KEY EXCLUSIONS
• Deliberate acts or intent of wrongdoing
• Insolvency
• Contractual liability
• Prior claims / circumstances
• Prior Acts
• Employee practice violation
• Costs assessments – pre assessment only, won’t exclude cost overruns from E&O in development/delivery
• Any manufacturing or design defect at the point of manufacturing
• Patent / Trade Secret
